Often people simply enter the space without much thought with regards to their taxes. At times, the prices pump and they “FOMO” in. Let’s be honest, we see even the most seasoned investors and institutions do this. Unfortunately, once this happens the reality is that it is quite difficult to change events on a retrospective basis. You simply cannot re-org history; at least not in the ATO’s blockchain ledger of events.

Depending on whether you are “holding on for dear life” (a HODLER), a day trader, miner, or Crypto start-up, ensuring you have the tailored business & investment structure to carry out your crypto enterprise is vital to building wealth, reducing the taxes you pay, and ensuring you leave your legacy here. It is definitely not one size fits all.

When considering cryptocurrencies, you need to ensure you give thought to the following:

• Adequate control and segregation of your crypto assets and wallets
• Asset protection if you are in business or undertaking ‘risky’ ventures
• Ability for your entity to accumulate profits/gains for wealth creation
• Flexibility to stream and distribute gain in a tax effective manner
• Access to appropriate taxation incentives such as:
  – CGT 50% general discount for investors
  – Capital allowance incentives for businesses
  – Research and development tax rebate
  – Base rate entity tax rate reduction
  – Corporate tax rate flat cap

At Consensus Layer, we take the time and attention to do a deep dive into your objectives to tailor an appropriate Crypto Tax Structure which best achieves your vision.

If you sought taxation advice from your current accountants and were not impressed with the answer given as “there is nothing you can do”; it doesn’t hurt to get a second opinion. As Chartered Tax Advisors, we bear the mark of tax excellence and there maybe a few strategies we can use to restructure entities and minimising the tax consequences of doing so.

Let us review you tax and crypto health, if your current accountant is doing everything they can to assist with your cryptocurrency affairs, then we’ll tell you that they are awesome! Worst case, you might lose some time having a chat, but gain a companion and colleague in this adventure to a decentralised future.

Consensus Layer works alongside Industry Professionals (Financial Advisors & Lawyers) to provide you with access to investing in Crypto within an SMSF. We do not offer financial advice; however, we can recommend partners who do and if you decide this is the most appropriate solution for you, our services include:

• SMSF Compliance: end to end compliance support with your annual mandatory SMSF obligations including annual financial reports, SMSF annual return and audit without the troubles of organising separate professional engagements.

Accounting is complex; let alone trying to add another unit of currency into the mix with accounting for Crypto transactions. Depending on the involvement of your activities, you may need to prepare:

• Tax specific crypto reports;
• Monthly/quarterly/bi-annually blockchain bookkeeping;
• Special purpose financial statements as required by regulatory authorities;
• Income tax returns for your respective entities to ensure compliance and tax minimisation;
• GST, PAYG withholding, super and fringe benefits tax registrations, business activity statements; and
• Attend to record keeping and position tracking for gains/profits.

Consensus Layer’s innovative cloud-based technologies and applications will be able to provide you with a customised management system to be able to ensure you meet any and all of your compliance obligations stress-free.

From a tax perspective, just because Crypto has ‘currency’ in its name, it is not actually a foreign currency. The ATO recognise Cryptos as CGT assets and there maybe differing tax treatments depending on the related activities which include:

• Acquiring cryptocurrencies as an investment
• Trading cryptocurrencies under a profit-making plan (day trader)
• Accepting cryptocurrencies for payment of goods and services
• Swapping between on cryptocurrency and another
• Paying for goods and services using cryptocurrencies
• Selling and buying cryptocurrencies in the ordinary course of business
• Using cryptocurrencies in your self-managed superannuation fund
• Undertaking an exchange service with cryptocurrencies
• Creating your own DAO
• Creating your own token to offer to the public (ICO)
• Mining, staking or minting digital assets
• Estate planning with digital assets
• Paying employees with cryptocurrencies

By partnering with the best modern tax advisors in the Crypto space, you can ensure you are at the forefront of this digital revolution through one of the most tax effective vehicles in the Australian Market today.

Cryptocurrency is complex!

The crypto community challenges the nature of our centralised/traditional monetary system. Every day something new is being created in the space: non-fungible tokens, decentralised finance (defi), DAOs, or even just new crypto and digital products.

Want tax certainty in this space with your personal/business tax issues? What about ensuring your customers and suppliers know the tax treatment of the digital products they acquire from you?

We can assist with seeking a personalised ruling from the ATO in the form of:

• Private Binding Rulings: these rulings set out how tax law applies to ‘you’ in relation to your specific circumstances. The answer provided by the ATO is binding on them and thus ensures peace of mind they change their opinion later down the track.

• Product Rulings: these rulings set out how the tax law applies to ‘your customers’ for the products they are acquiring from you. Like with private rulings, the ATO is bound by law to the ruling they give for your customers.